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H.R. 5063, the “Stop Settlement Slush Funds Act of 2016,” would prohibit the enforcement or negotiation of any settlement agreement requiring donations to remediate harms that are not “directly and proximately” caused by a party’s unlawful conduct.

The proponents of this bill claim that the Justice Department and civil enforcement agencies use such settlement agreements to unlawfully augment their own budgets as an end-run around the congressional appropriations process. 

I oppose H.R. 5063 for several reasons.  

To begin with these types of settlement agreements have been successfully used to remedy various harms caused by reckless corporate actors. 

For example, they have been utilized to facilitate an effective response to the predatory and fraudulent mortgage lending activities that nearly caused the economic collapse of our Nation. 

Settlement agreements with two of these culpable financial institutions—Bank of America and Citigroup—required a donation of less than 1% of the overall settlement amount to help affected consumers.

I cannot agree with the claim that the Justice Department has used these settlement agreements as a “vehicle for funding activist groups.”

Notwithstanding the production of hundreds of pages of documents by the Justice Department, along with hundreds of pages of documents produced by private parties, we have not seen any evidence that the government included unlawful or politically motivated terms in its settlement agreements with Bank of America or Citigroup.

It has also been asserted that the Justice Department and other agencies have augmented their appropriations through these settlement agreements.

But, existing law already prevents agencies from augmenting their own funds through civil enforcement.

These laws require that donations in settlement agreements have a clear nexus to the prosecutorial objectives of the enforcement agency.

And, both the Government Accountability Office and the Congressional Research Service conclude that that settlement agreements providing for secondary remediation do not violate Congress’ constitutional power of the purse.

Finally, I am also concerned that H.R. 5063 would have harmful consequences on the remediation of systemic harms in civil enforcement actions.

Settlement agreements allow parties to resolve their civil liability by voluntarily remediating the harms caused by their unlawful conduct. 

For some unlawful conduct—such as discrimination based on race or religion—secondary remediation of harms may be the only remedy available for systemic violations of the law.

These lawsuits typically affect the interest of individuals who are not themselves parties to an action.

Secondary remediation in these cases serves as an important tool to protect victims of discrimination through voluntary compliance and training programs. Given these concerns and others presented by the bill, I accordingly must oppose H.R. 5063.